What Will It Take To Lose LPs | Early-Stage Secondaries | $1B+ IPOs Up 74%

By Becca Szkutak
With reporting from Alex Konrad and Kenrick Cai
Howdy! Welcome to Midas Touch. I’m Becca Szkutak and I’m joined by senior editor Alex Konrad and senior reporter Kenrick Cai.

In this edition Alex dives into why LPs keep quiet when the VCs they back make unsavory comments and how that may change in the future, I chat with a U.K.-based fund bringing liquidity to the early stages, we look at 2021 IPO data that shows there was $1.6 trillion in collective value for unicorn IPOs last year, and we meet a startup that looks to better connect patients to the $30 billion in yearly philanthropic medical aid. Let’s do it.

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January 22, 2022
Elevator Pitch
Photo of Chamath Palihapitiya speaking at a conference.
Many VCs wonder how prominant investors can say controversial things and keep their LPs but it's a bit more complicated than that. Mike Windle/Getty Images for Vanity Fair.
“That email crossed lines that should never be crossed.” So tweeted billionaire Qualtrics cofounder and Utah Jazz owner Ryan as he reshared a statement from the CEO of Entrata denouncing wild claims made by that area tech unicorn’s cofounder and former chairman Dave Bateman earlier this month. Bateman’s email – full of wild, anti-Semitic conspiracy claims about Pope Francis and Covid-19 vaccines – cost him his board position within hours. Three days later, the company he co-founded announced he would divest his equity position, too.

It wasn’t the past month’s only instance of controversial remarks prompting social media backlash and public outcry or calls for divestiture from tech leaders. Tweets by Palantir and 8VC cofounder Joe Lonsdale claimed "broken" culture and "out of wedlock births" were reasons for Black entrepreneurs raising less capital than founders of other races. Black investors voiced their exhaustion at media requests to weigh in on Lonsdale, noting that non-Black VCs rarely speak out about racism in their industry. (Lonsdale later tweeted: “it’s important to be aware of past racism, kind, inclusive, and against actual racism of all sorts.”) Then Chamath Palihapitiya, the Social Capital cofounder and SPAC specialist, sparked an entire news cycle, commenting that “nobody cares” about China’s suspected genocide against the Uyghur population, including him. Politicians got in on the criticism; Palihapitiya’s partial ownership of the Golden State Warriors led the team to publicly distance itself. Palihapitiya issued a sort-of apology.

The aggregate of these controversies made Midas Touch wonder: what is that uncrossable line in venture capital? What if instead of a startup unicorn chairman, Bateman had instead been a VC? Would such an investor’s limited partners, who provide their capital to invest, have any recourse to take action?

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Deal Dive
headshot of Ethan Davidoff.
Ethan Davidoff started Atlas Health to make it easier for people to access medical financial aid. Atlas Health
In 2016, Ethan Davidoff was scrolling on Facebook and was stopped by a post from one of his wife’s friends from college. She had cancer and to pay for her chemo treatments, she was launching a GoFundMe campaign. “I thought, ‘is this really the social safety net for people with cancer?’” Davidoff remembers. For many, it is. The crowdfunding site says about a third of the money raised on the platform is for medical expenses — and that was back in 2019 before the pandemic put additional strain on people’s finances. At the time, Davidoff thought there must be a better way for people to cover those costs. He started researching and discovered philanthropic medical aid programs — 20,000 of them. These funds have a collective $30 billion in potential annual aid and Davidoff thought if he could connect people to these funds it could make a huge difference. 

The first step was getting all these sources of aid in one perpetually up-to-date database. Once that had largely been built, Davidoff was left to figure out what kind of business model would best bring the information to underlying patients in a way they would actually utilize. He landed on hospitals. “Hospitals can’t turn you away if you can't pay,” he tells Midas Touch. “They will be on the hook if they don’t get paid. They will struggle to keep the lights on and continue to serve the community. Let’s focus on this segment and help their patients.” The integrated software company he built to do just that, Atlas Health, launched in 2019 and has since taken off, adding 40 healthcare systems to its roster and looking to expand....

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